Articles Posted in Government Contracts

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Effective January 1, 2015, all contractors bidding on or performing work within the City of Shasta Lake, California involving connects to or modifications of the City of Shasta Lake’s potable (fit or suitable for drinking) water distribution system will be required to have and to maintain a Water Distribution Operator, Grade 2 certification. This requirement applies to both work performed on the City of Shasta’s system under contract with the City of Shasta and to work for a private developer or property owner. If you have questions, contact Jeff Tedder, City Engineer, 530-275-7423.

Examples of work that require a certification include, but are not limited to:

  • Water distribution or transmission main installation, extension, or replacement
  • Water main fitting, valve, or fire hydrant installation or replacement
  • Miscellaneous work involving depressurizing existing water mains for any reason

Under the regulations adopted in January 2001, becoming certified is a two-step process. The applicant submits an initial application and filing fee to take the required examination. This application will be evaluated to determine if the applicant meets the educational requirement. Once that initial application has been approved, the applicant will be permitted to take the examination. If the applicant passes the examination, he/she will have 3 years (from the date of the exam) to submit the second application and filing fee, and to obtain the certification. The second application is evaluated for the experience portion of the certification requirement. If the applicant has fulfilled the experience requirement, he/she will be issued a certificate; if the applicant has not fulfilled the experience requirement, he/she will have 1 year (from the date the second application was submitted) to obtain the required experience.

Contractors are cautioned that the certification process takes several months due to exam scheduling requirements. Distribution exams are offered twice a year in March and September and the final filing date for the March exam is January 1 and the final filing date for the September exam is July 1; and treatment exams are offered twice a year in May and November and the final filing date for the May exam is March 1 and the final filing date for the November exam is September 1.

For additional information on the certification process, check out the California State Water Resources Control Board’s Drinking Water Treatment & Distribution System Operators resource webpage, which includes information on continuing education, training and guidance, exam information, operator certification information (including the regulations), and the treatment exam application and distribution exam application.

The Drinking Water Treatment and Distribution System Operator Certification Program is located at 1001 I Street, 17th Floor, Sacramento, California, 95814. For general information or inquiries, contact the Operator Certification Program at:

Operator Certification Program – Drinking Water (OpCert)
State Water Resources Control Board P.O. Box 944212 Sacramento, CA 94244-2120 Telephone: (916) 449-5611 Fax: (916) 449-5654

Additional Resource: City of Shasta Lake, California

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The celebrated case of Mingo Logan Coal Co. v. EPA was returned to the U.S. District Court of the District of Columbia after the Court of Appeals reversed the District Court’s ruling that EPA had illegally invalidated a Army Corps of Engineers (“Corps”) 404 permit issued to Mingo Logan’s proposed coal mining operations in West Virginia. On March 14, 2014, the Supreme Court rejected any appeal of the DC Circuit’s opinion, which is reported at 714 F. 3d 608. The District Court completed its review of the remaining APA issues and on September 30, 2014, ruled that EPA had broad authority under the law to veto a Corps permitting decision.

Mingo Logan requires Clean Water Act (CWA) National Pollutant Discharge Elimination System (NPDES) permits to conduct coal mining operations at the Spruce No. 1 Mine in West Virginia. The permit application process was initiated by Mingo Logan’s predecessor in 1998, and the State of West Virginia issued an NPDES permit to Mingo Logan pursuant to its delegated CWA Section 402 authority, and the Corps issued a CWA 404 permit in 2007. The operations triggered opposition because of the perceived consequences of “mountain fills” in West Virginia and their impact on navigable waters and wildlife in the area. Two years later, EPA asked the Corps to revoke or modify its permitting action, but the Corp refused to do so. EPA accordingly invoked its authority under CWA Section 404(c) to withdraw the disposal sites that were designated in the Corps permit. In 2011, EPA completed its action to withdraw theses designated disposal sites. Mingo Logan sued EPA, and the District Court agreed with its argument that EPA acted too late, a ruling the Court of Appeals reversed in view of the plain language of the statute.

The District Court has now reviewed the remaining APA arguments, in particular whether EPA’s determination that discharges permitted under the 404 permit would cause unacceptable adverse environmental impacts was arbitrary and capricious. The District Court held that EPA’s determination was reasonable, supported by the record, and based on considerations within EPA’s purview. The District Court noted that EPA had continually expressed its concern about the impacts of the proposed discharge while the permit was under review by the Corps. It also held that an email by an EPA official to Mingo Logan that the agency had no interest in pursuing the matter any further after the Corps acted could be disregarded since this kind of statement could not bind the agency. The agency was always free to change its mind, and the email was not the product of a formal legal process requiring APA compliance to do so. While the District Court was critical of EPA’s argument that the proposed discharge would likely harm an endangered species that had never been seen in the area of the proposed coal mining operation, there were plenty of other species that could be harmed.

Finally, the District Court rejected the argument that EPA’s concerns about water quality somehow invaded the State’s regulatory sphere. Under the CWA, West Virginia is given the authority to make water quality rules and designations under CWA 401. EPA’s concerns about downstream water quality were authorized by other provisions of the CWA, and indeed, the agency is not required to consider West Virginia’s water quality determinations at all when it exercises its veto power under CWA Section 404(c). In the District Court’s view, in these circumstances, EPA can impose even stricter water quality standards than those required by the State.

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On September 19, 2014, the U.S. Court of Appeals for the Ninth Circuit held that California Senate Bill 990 violates the Constitutional doctrine of “intergovernmental immunity” because it directly regulates the activities of the US Department of Energy in violation of the Supremacy Clause. S.B. 990 prescribes state radioactive cleanup standards at the Santa Susan Field Laboratory, a site which is undergoing extensive cleanup by the federal government. The case is The Boeing Company v. Movassaghi, Acting Director of the California Department of Toxic Substance Control, et al.

The federal government used the Santa Susan Field Laboratory site, located in Ventura County, to conduct nuclear research, operate nuclear reactors, build and test rockets, and conduct other defense-related work. According to the Ninth Circuit, all of these activities over the years “created a terrible environmental mess”, which the federal government and Boeing, as its contractor, are addressing. The soil, groundwater and bedrock were seriously contaminated.

California enacted S.B. 990, prescribes stringent cleanup standards, purporting to make the large site suitable for subsistence farming activities. However, the Ninth Circuit notes that the doctrine of intergovernmental immunity provides that the activities of the federal government are shielded by the Supremacy Clause from direct state regulation, and S.B. 990 violates this principle. It concluded that no provisions in the Atomic Energy Act, Resource Conservation and Recovery Act or Comprehensive Environmental Response, Compensation, and Liability Act indicate that Congress envisioned a role for the state as embodied in S.B. 990, and therefore the law is of no effect at this site.

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On September 15, 2014, the Office of Federal Contract Compliance Programs (OFCCP) released its Notice of Proposed Rulemaking (“Proposed Rule“) implementing President Obama’s Executive Order 13665 (“EO 13665“) (April 8, 2014), banning federal contractors from taking adverse action against employees and applicants who discuss their pay. EO 13665 instructs that, within 160 days of the date of EO 13665, the Secretary of Labor shall propose regulations prohibiting federal contractors from discharging or discriminating against employees or applicants who inquire about, discuss, or disclose their own compensation or compensation of other employees and applicants. The Proposed Rule will apply to nearly all federal contracts exceeding $10,000 entered into or modified on or after the effective date.

Executive Order 13665 states that it is “designed to promote economy and efficiency in Federal Government procurement.” It explains that:

When employees are prohibited from inquiring about, disclosing, or discussing their compensation with fellow workers, compensation discrimination is much more difficult to discover and remediate, and more likely to persist. Such prohibitions (either express or tacit) also restrict the amount of information available to participants in the Federal contracting labor pool, which tends to diminish market efficiency and decrease the likelihood that the most qualified and productive workers are hired at the market efficient price. Ensuring that employees of Federal contractors may discuss their compensation without fear of adverse action will enhance the ability of Federal contractors and their employees to detect and remediate unlawful discriminatory practices, which will contribute to a more efficient market in Federal contracting.

In turn, OFCCP’s Fact Sheet on the Proposed Rules states that “[e]nabling the more than 28 million employees of Federal contractors and subcontractors to discuss their compensation without fear of adverse action can contribute to reducing pay discrimination and ensuring that qualified and productive employees receive fair compensation.”

The Fact Sheet provides “highlights” of the Proposed Rule:

  • Amends the Equal Opportunity Clause of Executive Order 11246 that requires certain information be included in Federal contracts and subcontracts. The amendment mandates inclusion of the requirement that Federal contractors and subcontractors refrain from discharging, or otherwise discriminating against, employees or applicants who inquire about, discuss, or disclose their compensation or the compensation of other employees or applicants. An exception exists where the employee or applicant makes the disclosure based on information obtained in the course of performing his or her essential job functions.
  • Requires that Federal contractors incorporate the nondiscrimination provision into their existing employee manuals or handbooks, and disseminate the nondiscrimination provision to employees and to job applicants.
  • Defines key words or terms such as compensation, compensation information, and essential job functions as used in the Executive Order.
  • Provides employers with two defenses to an allegation of discrimination: one based on enforcing rules against disruptive behavior; and the other based on the essential functions of the person’s job.

The Proposed Rule will be published in the Federal Register on September 17, 2014. Interested parties will have until December 16, 2014 to submit comments.

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Today, Pillsbury attorney Joël Van Over  published his advisory titled Corrective Action Catch 22: Court of Federal Claims Holds Agency Action Must Be Rational Even If GAO Protest Decision Was Not. The Advisory discusses the U.S. Court of Federal Claims’ July 15, 2014 decision in RUSH Construction, Inc. v. United States.

This decision reflects the unusual circumstance in which the court effectively sat in appellate review of an earlier bid protest decision by the Government Accountability Office (GAO) after the U.S. Army Corps of Engineers followed GAO’s recommendation in that decision. The court ultimately overruled GAO when it found that it was arbitrary and capricious for the agency to follow GAO’s recommendation. In so doing, the court cited numerous shortcomings in GAO’s reasoning and its reliance on inapposite case law. The RUSH decision, authored by the Court of Federal Claims’ new chief judge, may foretell greater judicial scrutiny of agency corrective action and a shift at the court away from deference to GAO’s bid protest recommendations.

If you have any questions about the content of this blog, please contact the Pillsbury attorney with whom you regularly work or Joël Van Over , the author of this blog.

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Recently President Obama issued an Executive Order purportedly seeking to increase efficiency and cost savings in the work performed by parties who contract with the Federal Government by ensuring that they understand and comply with labor laws. In sum, the Executive Order requires contractors seeking federal contracts to disclose labor law violations, and to require their subcontractors to do the same, and creates new compliance advisers at agencies to oversee decisions about which contractors are awarded federal work.

The Executive Order requires, for procurement contracts for goods and services, including construction, where the estimated value of the supplies acquired and services required exceeds $500,000, each agency to ensure that provisions in solicitations require that the offeror represent, to the best of the offeror’s knowledge and belief, whether there has been any administrative merits determinations, arbitral awards or decisions, or civil judgments rendered against the offeror within the preceding 3-year period for violations of any of the following:

(A) the Fair Labor Standards Act;
(B) the Occupational Safety and Health Act of 1970;
(C) the Migrant and Seasonal Agricultural Worker Protection Act;
(D) the National Labor Relations Act;
(E) 40 U.S.C. chapter 31, subchapter IV, also known as the Davis-Bacon Act;
(F) 41 U.S.C. chapter 67, also known as the Service Contract Act;
(G) Executive Order 11246 of September 24, 1965 (Equal Employment Opportunity);
(H) section 503 of the Rehabilitation Act of 1973;
(I) 38 U.S.C. 3696, 3698, 3699, 4214, 4301-4306, also known as the Vietnam Era Veterans’ Readjustment Assistance Act of 1974;
(J) the Family and Medical Leave Act;
(K) title VII of the Civil Rights Act of 1964;
(L) the Americans with Disabilities Act of 1990;
(M) the Age Discrimination in Employment Act of 1967;
(N) Executive Order 13658 of February 12, 2014 (Establishing a Minimum Wage for Contractors); or (O) equivalent State laws, as defined in guidance issued by the Department of Labor

The offeror will, prior to making an award, be provided an opportunity to disclose any steps taken to correct the violations of or improve compliance with the labor laws, including any agreements entered into with an enforcement agency. However, contracting officers are required to consider the information provided in determining whether an offeror “is a responsible source that has a satisfactory record of integrity and business ethics.”

In addition, for any subcontract where the estimated value of the supplies acquired and services required exceeds $500,000 and that is not for commercially available off-the-shelf items, each agency’s contracting officer is to require that, at the time of execution of the contract, the contracting party represent that it: (A) will require each subcontractor to disclose any administrative merits determinations, arbitral awards or decisions, or civil judgments rendered against the subcontractor within the preceding 3-year period for violations of any of the requirements of the labor laws listed above, and update the information every 6 months; and (B) before awarding a subcontract, will consider the information submitted by the subcontractor in determining whether a subcontractor is a responsible source that has a satisfactory record of integrity and business ethics, except for subcontracts that are awarded or become effective within 5 days of contract execution, in which case the information may be reviewed within 30 days of subcontract award.

During performance of the contract, contractors subject to the Executive Order will be required to self-report their labor law violations every 6 months disclosing violations of any of the laws set forth above.

Additional Source: The New York Times, Obama Plans New Scrutiny for Contractors on Labor Practices ; The Washington Post, What Obama’s new executive order means for federal contractors; Huff Post Politics, Obama Expected To Sign Executive Order On Federal Contractor Workplace Conditions

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Recently enacted law establishes a new public works program to replace the Compliance Monitoring Unit and Labor Compliance Program requirements for bond-funded and other public works projects. Effective July 1, 2014, the California Department of Industrial Relations‘ (DIR) program covers all bond-funded and public works projects in the state rather than just selected processes. Public works refers to construction, alteration, demolition, installation, or repair work (including maintenance) done under contract and paid by public funds. It does not include those done by a public agency with its own employees. With minor exceptions, all workers employed on public works projects must be paid the prevailing wage determined by the Director of the DIR according to the type of work and location, and the prevailing wage rates are usually based on rates specified in collective bargaining agreements.

Among other things, the new law requires contractors and subcontractors to be registered and qualified by the DIR in order to bid on, be listed in a bid proposal for, or engage in the performance of any contract for a public work. Contractors and subcontractors will be required to register using the DIR’s new online application, pay an initial $300 non-refundable registration fee, pay an annual renewal fee each July 1 thereafter and, as part of the registration process, provide specified information to establish the contractor’s/subcontractor’s eligibility to be registered; the new law excepts contracts determined to be for public work only after the contract has been awarded or the bid has been awarded, except as specified.

To be eligible to bid and work on California public works projects, contractors and subcontractors must meet minimum qualifications:

o Must have workers’ compensation coverage for any employees and only use subcontractors who are registered public works contractors o Must have Contractors State License Board license if applicable to trade o Must have no delinquent unpaid wage or penalty assessments owed to any employee or enforcement agency o Must not be under federal or state debarment o Must not be in prior violation of this registration requirement once it becomes effective; however, for the first violation in a 12 month period, a contractor may still qualify for registration by paying an additional penalty

DIR’s new online application is available for contractors and subcontractors who must register with DIR. The online features also provide agencies that oversee California public works projects with a searchable database of qualified contractors; for example, the California Labor Commissioner’s Office will continue to monitor and enforce prevailing wage requirements.

The requirement to list only registered contractors and subcontractors on bids is effective March 1, 2015, and the requirement to only use registered contractors and subcontractors on public works projects applies to all projects awarded on or after April 1, 2015.

Additional Source: DIR, Public Works; DIR, New Public Works Contractor Registration Law (SB 854) Fact Sheet; DIR News Release No.: 2014-55 Department of Industrial Relations Launches Public Works Contractor Online Application System (Jul. 1, 2014)

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UPDATE:
*S.B. 315, Sep. 17, 2014, Governor signed into law *S.B. 1159, Sep. 28, 2014, Governor signed into law *A.B. 26, Sep. 30, 2014, Governor signed into law
*A.B. 1702, Sep. 18, 2014, Governor signed into law *A.B. 1705, Sep. 27, 2014, Governor signed into law *A.B. 1870, Sep. 30, 2014, Governor signed into law *A.B. 2396, Sep. 28, 2014, Governor signed into law

The California Contractors State License Board (CSLB) monitors legislation that it is sponsoring as well as bills that may have an impact on the construction industry. In its Summer 2014 Newsletter, the CSLB identifies a handful of bills that it is watching.

Senate Bills
S.B. 315 (Lieu) — Contractors — Among other things, this bill would authorize a person who is not licensed California contractor to advertise for construction work or a work of improvement only if the aggregate contract price is less than $500 and the person states in the advertisement that he or she is not licensed.

S.B. 1159 (Lara) — Professions and vocations: license applicants: individual tax identification number — This bill would require licensing bodies to require a license applicant (other than a partnership) to provide either an individual tax identification number or SSN, if one has been issued to the applicant, and would require the licensing bodies to report to the State Franchise Tax Board, and subject a licensee to a penalty, for failure to provide that information.

Assembly Bills
A.B. 26 (Bonilla) — Construction: prevailing wage — This bill would revise the definition of “construction” to include work performed during the post-construction phases of construction, including, but not limited to, all cleanup work at the jobsite.
A.B. 1702 (Maienschein/Mitchell) — Professions and vocations: incarceration — This bill would provide that an individual who has satisfied any of the requirements needed to obtain a license while incarcerated, who applies for that license upon release from incarceration, and who is otherwise eligible for the license will not be subject to a delay in processing the licensing application or a denial of the license solely on the basis that some or all of the licensure requirements were completed while the individual was incarcerated.
A.B. 1705 (Williams) — Public contracts: payment —
Existing law (until January 1, 2016) authorizes the retention proceeds withheld from any payment by an awarding entity from the original contractor, by the original contractor from any subcontractor, and by a subcontractor from any subcontractor to exceed 5% on specific projects where the director of the applicable department has made, or the governing body of the public entity or designated official of the public entity has approved, a finding prior to the bid that the project is substantially complex and requires a higher retention and the department or public entity includes both this finding and the actual retention amount in the bid documents. A.B. 1705 would extend the operation of these provisions until January 1, 2020 and, instead of requiring that the finding and actual retention amount be included in the bid documents, it would require that the bid documents include details explaining the basis for the finding in addition to the actual retention amount. It would also define projects that are not “substantially complex.”
A.B. 1870 (Alejo) — Public works: prevailing wage: multiemployer apprenticeship program grants — This bill would, if there are two or more approved multi-employer apprenticeship programs serving the same craft or trade and geographical area for which the training contributions were made to council, require the grant to be divided among all the approved multi-employer apprenticeship programs serving the same craft or trade in California based on the number of apprentices registered in each program.
A.B. 1918 (Williams) — Energy: design and construction standards — Among other things, this bill would require the Public Utilities Commission, in an existing proceeding, by January 1, 2016, to authorize a program to improve compliance with the State Building Standards Code requirements, and any applicable local ordinances, for heating and air conditioning equipment through existing energy efficiency programs administered by electrical corporations and gas corporations, or administered by third-parties on behalf of electrical corporations and gas corporations.
A.B. 1939 (Daly) — Public works: prevailing wages: contractor’s costs– Signed into law on July 21, 2014 — The new law authorizes a contractor to bring an action in a court of competent jurisdiction to recover from the hiring party that the contractor directly contracts with, any increased costs, including labor costs, penalties, and legal fees incurred as a result of any decision by the Department of Industrial Relations, the Labor and Workforce Development Agency, or a court that classifies, after the time at which the hiring party accepts the contractor’s bid, awards the contractor a contract when no bid is solicited, or otherwise allows construction to proceed, the work covered by the project, or any portion thereof, as a public work, except under the circumstances specified.
A.B. 2396 (Bonta/Skinner) — Convictions: expungement: licenses — This bill would prohibit a licensing board from denying a license based solely on a conviction that has been dismissed, as contemplated by existing law.

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On June 20, 2014, Missouri Governor signed into law Senate Bill 529. The Act revises and expands the scope of the Missouri Public Prompt Payment Act and the law relating to public works projects. The revised provisions are operative August 28, 2014. Of note, under existing law, all public works contracts made by a political subdivision for a public works project must provide for prompt payment to the contractor. Under the revised Act, these contracts must also provide for prompt payment of any professional engineer, architect, landscape architect, or land surveyor.

Under existing law, a public owner may retain 5% of the value of a public works contract or up to 10% if it is determined by the public owner and the architect or engineer determine that a higher rate is required to ensure performance. The revised Act provides that a public owner may retain up to 10% if the contractor is not required to obtain a bond because the contract is not estimated to exceed $50,000; the Act requires contractors to furnish a bond when the estimated cost of the project exceeds $50,000 instead of $25,000 as contemplated under the existing law. In turn, retainage could be adjusted prior to completion when work was proceeding satisfactorily and retainage was to be paid after substantial completion of the contract or per contract terms. In such cases, 200% of the value of the remaining work was to be withheld until completion. The Act provides that 150% of the value is to be withheld until completion. In turn, under existing law, contractors were required to pay subcontractors and suppliers when they received payment less any retention not to exceed 10%. The Act lowers the retention to 5%.

The Act further provides that, if the owner determines the work is not substantially completed, the owner must provide a written explanation within 14 calendar days to the contractor. The contractor must then provide the notice to its subcontractors and suppliers. If the explanation is not given by the public body, the public body must pay at least 98% of the retainage within 30 calendar days. In addition, under existing law, when the public owner does not release full payment due because there are specific areas of work or materials it is rejecting, the subcontractors and suppliers involved are not paid for the rejected work. The Act now requires that the subcontractors and suppliers that will not be paid are to be provided a written explanation as to why the work or supplies were rejected.

The Act requires the public owner to include any withheld retainage with final payment of moneys owed to the contractor within 30 days of the due date, and to pay any professional engineer, architect, landscape architect, or land surveyor the amount due within 30 days after receiving an invoice. If full payment is not made, the contracting agency must pay 1.5% interest per month it remains unpaid.

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In mid-April 2014, Nebraska Governor signed into law Legislative Bill 961. Of note, it includes revisions to the Nebraska Construction Prompt Pay Act. The Act is set forth in Nebraska Revised Statutes §§ 45-1201 to 45-1210 and Section 8 of L.B. 961. The revised provisions are operative July 18, 2014.

Subdivision (3) of Section 45-1203 is amended to read:

“The owner or the owner’s representative shall release and pay all retainage for work completed in accordance with the provisions of the contract within forty-five days after the project, or a designated portion thereof, is substantially complete. When a subcontractor has performed work in accordance with the provisions of a subcontract and all conditions precedent to payment contained in the subcontract have been satisfied, the contractor shall pay all retainage due such subcontractor within ten days after receipt of the retainage.” (Underline added).

In turn, Subdivision (1) of Section 45-1204 has been amended to read:

“When work has been performed pursuant to a contract, an owner, contractor or subcontractor may only withhold payment… [f]or retainage, in an amount not to exceed the amount specified in the applicable contract, which shall not exceed a rate of ten percent. If the scope of work for the contractor or subcontractor from which retainage is withheld is fifty percent complete and if the contractor or subcontractor has performed work in accordance with the provisions in the applicable contract, no more than five percent of any additional progress payment may be withheld as retainage if the contractor or subcontractor provides or has provided satisfactory and reasonable assurances of continued performance and financial responsibility to complete the work.” (Underline added).

The definitions of contractor, subcontractor and substantially complete have also been revised:

  • The term “contractor” “does not include an individual or an entity performing work on a contract for the State of Nebraska or performing work on a federal-aid or state-aid project of a political subdivision in which the state makes payments to the contractor on behalf of the political subdivision.” Neb. Rev. St. § 45-1202(1).
  • The term “subcontractor” “does not include an individual or an entity performing work as a subcontractor on a contract for the State of Nebraska or performing work on a federal-aid or state-aid project of a political subdivision in which the state makes payments to the contractor on behalf of the political subdivision.” Neb. Rev. St. § 45-1202(6).
  • The term “substantially complete” means “the stage of a construction project when the project, or a designated portion thereof, is sufficiently complete in accordance with the contract so that the owner can occupy or utilize the project for its intended use.” Neb. Rev. St. § 45-1202(7).

Section 8 of L.B. 961 further provides that “Any individual, partnership, firm, limited liability company, corporation, or company may bring an action to recover any damages caused to such person or entity by a violation of the Nebraska Construction Prompt Pay Act. In addition to an award of damages, the court may award a plaintiff reasonable attorney’s fees and costs as the court determines is appropriate.”